Negotiations between German major carmakers and Europe’s largest industrial union, IG Metall, on pay rise and use of temporary workers have come to a stalemate.

"Talks are resuming, but so far five rounds of negotiations have produced little movement and a round of warning strikes earlier this month at several companies, including Porsche, BMW and Daimler, suggest that the powerful union is gearing up for a confrontation," the Bureau reported.

Despite the German economy showing signs of slow down, IG Metall is pushing for a 6.5% pay increase. The union was offered a 3% instead, but the offer was turned down. Workers in Germany car factories are some of the highest paid as compared to workers in car manufacturing facilities in other parts of the world . In addition, their standard work week is only 35 hours (the legal work week in Singapore is 44 hours).

Interestingly, the German government seemed to be supportive of the union’s recommendation. Wolfgang Schaeuble, Germany’s finance minister, has suggested in an interview that German industrial companies can afford the pay increase since they have benefited from the structural reforms adopted in Germany a decade ago.

The workers may be asked to increase productivity first if they were in Singapore. However, if the demand of the union goes through, loss-making car maker, Opel, may have less bargaining power in asking for concessions from IG Metall.

The union is also going to address the growing public resentment towards the increased pay and benefits that German car makers have been offering senior executives in recent years. It looks like growing income gap has become an issue in Germany as well.

I have been a car fanatic since 1989, when my father was changing our family car then to a Toyota Corolla 1.6 GL fitted with a Twin Cam 16 valve engine that was carburetor-fed, a big deal back in those days. The automobile technology and industry fascinates me and I hope to broadcast these interesting developments to everyone out there through this blog.